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The outlook for India Cements (₹136.2) is negative. The stock finds immediate support at ₹117 and a close below that level can trigger fresh selling that could drag it to two-digits. On the other hand, an immediate resistance appears to be at ₹167 and then at ₹184. It will regain the bullish momentum only on a close above ₹213. We expect the stock to remain volatile with a downward bias in the short term.
F&O pointers: India Cements’ May futures added 6.16 lakh shares or 2.3 per cent in open interest on Friday alone and has seen a steady build-up even as the price declined from ₹150 to current levels. Option trading indicates that the stock could move in ₹150-130 range.
Strategy: We advice traders to go short on the stock with a stop-loss at ₹145 initially. If it opens on a weak note, the stop-loss can be shifted to ₹137 for a target of ₹122.
This strategy is risky, as wild swings could erode investments very quickly. So, only traders who can withstand wild swings and have deep pockets can consider.
Alternatively, risk-averse traders can consider buying ₹135-put, which closed at ₹5.95. As the market lot is 3,500 shares, it would cost the trader ₹20,825. The premium paid will be the maximum loss if India Cements stays above ₹the 135 level at the time of expiry. We advice traders to exit if the loss mounts to ₹7,500 or at a profit of ₹12,000.
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